Insurers have extended their commitment to offering cover to properties at high risk of flooding by one month to the end of July.
The guarantee, which is part of an agreement with government known as the Statement of Principles, was due to expire on June 30, but will now run for another month to give more time for the industry and ministers to finalise a replacement arrangement.
Otto Thoresen, director general of the Association of British Insurers, confirmed the decision in a letter sent to Environment Secretary Owen Paterson today.
Commenting on the extension, Thoresen said the government and ABI were continuing to have 'constructive decisions' on the future of flood insurance. In particular, discussions are focusing on how the ABI's plans for an emergency fund to pay out flooding claims, known as Flood Re, could work in practice. Under the industry’s proposals, this fund would be financed through a levy on insurance policies.
'There are still important issues to resolve and no deal has been reached, but negotiations are advanced and we will bring negotiations to a conclusion as soon as practicable,' he said. 'After the Statement of Principles expires on June 30, ABI members have agreed that they will continue to meet their commitments voluntarily for one additional month until July 31, to ensure that their customers across the UK can continue to access insurance while discussions are concluded.'
The announcement was welcomed by Ian Fletcher, director of policy at the British Property Federation. But he said property owners required more long-term certainty on flood insurance.
'Householders and businesses have been living with this uncertainty for far too long, and it has already driven up insurance premiums,' Fletcher added.
'The fact remains, we still don't know whether hundreds of thousands of homes and businesses will be able to access affordable flood cover in a matter of weeks.'